What's up with local gas price?


Motorists may get a break in what they’re paying at the pump with the arrival of a fuel barge here in 10 days. Or not.

Haines Borough Assembly member Dave Berry raised the issue of gas prices at this week’s assembly meeting, asking why they’re not dropping the way they are in the Lower 48. “It’s frustrating,” Berry said.

At about $4.76 per gallon for unleaded, local gasoline prices are among the highest in Southeast.

The national average price this week was $3.27, and the price was below $3 in a handful of Western states.

Fred Gray, manager of local distributor Delta Western, this week said he couldn’t say what to expect next in terms of prices. “It depends on when you load out of the refinery. There’s big swings. Last week, the market was down. This week it’s up because refineries are (shut) down in California.”

Haines prices this week compared to about $3.40 per gallon in Anchorage, $4 or less in Juneau, $4.23 in Ketchikan, $4.26 in Skagway, $4.36 in Petersburg, $4.73 in Wrangell, $4.76 in Hoonah, and $5.33 in Angoon.

The last barge shipment of gasoline came here in October, when the unleaded price to gas stations dropped 32 cents per gallon, Gray said.

As has been observed in regional gas price surveys in recent years, Southeast towns served by distributor Petro Marine tend to see lower prices than those served exclusively by Delta.

But local factors also appear to come into play.

Skagway levies no local sales tax on fuel during the winter months, amounting to about a 25 cent per gallon difference in cost compared to Haines.

In Hoonah, having two competing outlets has reduced the price somewhat, said Aldwin Harder, a partner in Hill’s Fuel, a company that started two years ago when Harder and a couple friends decided the town’s single outlet – Hoonah Trading – was charging too much.

“They were charging $6 per gallon and it was killing our town. We’re trying to make ourselves more competitive,” said Harder. Hoonah Trading buys from Petro Marine, but Harder said he shops between distributors for the best deal.

Hoonah Trading did not return messages left at company offices early this week.

Citing prices below $3 in parts of the Lower 48, Harder says prices in Southeast don’t seem to go down proportionately to their decline in the Lower 48. “It doesn’t make any sense to me.”

Smokey Norton, director of marketing for Petro Marine, says his company makes weekly price adjustments in Southeast, based on the cost of fuel at the purchase point in Seattle. “If nothing’s changed, we don’t change anything. If prices come down 15 cents, we pass it on. We look at the places we serve as one town, as much as we can,” Norton said.

Coreen Hoover, co-owner of Skagway’s sole gas station, said she changes her prices accordingly, regardless of the price at which she bought the fuel. “When it goes down to us, it goes down to customers. When it goes up to us, it goes up to customers.”

Petro Marine may have one critical advantage over Delta Western – a bulk storage plant in Ketchikan where deliveries to Southeast customers originate. Delta Western brings its fuel into Southeast on barges filled at Seattle refineries, Gray said this week.

Resident Sue Libenson has been researching fuel prices in Alaska for several months, part of a University of Alaska study commissioned by the Alaska Legislature.

Libenson said after the fuel price spike in 2008, Anchorage wholesale prices eventually came down to the wholesale prices in Seattle. (Pump prices in those two cities were comparable this week, with Seattle drivers paying $3.40 – about a dime per gallon less than Anchorage residents.)

Libenson said her group’s study hasn’t focused specifically on Southeast, but it would be instructive to compare pump prices in Southeast to those in Seattle, over time.

Comparing Southeast prices to those in Anchorage may be difficult, as retailers in Southcentral receive fuel from several sources, including Alaska-based refineries, she said.

Her group’s Anchorage-based study found the cost of fuel broke down to the these elements: cost of crude, 68 percent; refinining, 17 percent; distribution and marketing, 8 percent; federal taxes, 5 percent; and state taxes, 2 percent.

Libenson said she suspects that most of the difference in the cost of fuel between Anchorage and Southeast is due to low volume and a high cost of transportation and distribution here.

That’s where Petro Marine’s bulk storage in Ketchikan may be making a difference, she said. “There are costs of delivering to all these little towns. Every time the barge stops, it costs more. If you have a bigger barge and you’re unloading more, your loading costs would be less.”

One stream of thought is to have the state help build up storage infrastructure to reduce transportation costs, she said. “Should we build big fuel storage tanks in Alaska? Where and for what reason? That is a question… It’s a tricky question to get to the bottom of and what would fix it.”

Libenson said it’s helpful to remember that individual gas stations have their own pricing. In places like Seattle, prices at stations around town can differ by as much as 20 cents per gallon on the same day.

Libenson said there’s disagreement between analysts about why gas prices in relation to the price of crude don’t drop as quickly as they rise.

The CVN reported in 2008 that a $1.52 per gallon difference between the price here and the national average price was the widest in several years, comparing to a gap of just 82 cents in 2006.


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